What is Spread Betting | Spread betting Explained | CMC
Spread Betting UK - Open a Spread Betting Account
Spread Betting - Trading Without The Tax
Spread Betting is a form of trading stocks, or any other security by placing your trades on a brokers/bookmakers price rather than the actual market. Trading this way means (in the UK) you don't pay any stamp duty or become liable for capital gains tax on your profits (if there are any!).. But lets get down to the nitty gritty, stocks, indices, forex or commodities, ideas to trade or charts to watch... :) All welcome..
What is Two Blokes Trading? Two Blokes Trading is a fun and informative podcast and website for new and experienced home financial traders. It follows us, Tom and Owen, as we learn to trade profitably and consistently. We interview leading traders and trading industry insiders every week on the Podcast to give our listeners the best chance of becoming profitable traders.
Newbie Live UK trader with questions about trading, tax, and spread betting
hey forex bros, I'm a newbie UK trader with questions regarding tax, spread betting and trading. A little bit about my situation; I've had a live acc for about 2 months now, demo traded close to a year and a half. Live so far is going almost too good to be true! which is always nice but I'm treading lightly cos based on my stats, I'm bouned overdue some trades not going my way. Anyways, The reason I'm posting is because i always assumed traders don't get TAX'd in the UK. I didn't realize it only applies to spread betting until a couple days ago. I trade with Oanda, after learning this I've opened a spread betting acc with them and the UI and method of placing a trade/bet seems almost identical BUT it cant be right? my questions; - is there more of a risk to spread betting than normal trading? if so what is it? - would say a massive account closing SL slip be dealt with the same in spread betting as it would normal trading? - if trading is safer, would it be better to go back to trading and pay tax? - if you're a UK citizen too, what do you do and why? thanks for your time
Understanding options trading and spread betting in the UK
Sorry if this is a silly question but I was reading IG's guide on options trading and I'm a bit confused on the nomenclature. It seems that there are two ways to trade options on IG:
With a broker
By spread betting
I do understand the core differences between the two (spread betting doesn't bring Capital Gains Tax, while CFDs does) but I want to make a sanity check: spread betting is a specific concept whereby the platform allows you to gamble on some spread with a predefined £ value per point, whilst option trading is a more general financial derivative? If the above statement is correct, why is it that most UK platforms encourage options trading via spread betting? Peeking into many websites across the pond, they don't make any distinction whatsoever and there are clear-cut categories for options trading.
IG, the UK's oldest spread betting and CFD provider, now supports bitcoin trading
I was really surprised that I hadn't heard of this before, since IG is a heavyweight financial services company here in the UK. They seem to be pushing bitcoin pretty hard: http://www.ig.com/uk/bitcoin-btc
Got myself an FXCM demo spread betting account and getting to grips with the trading station platform. The live spread quoted on the FXCM website has EUUSD at ~0.4pips for spread betting but Trading station gives me a 1.4 spread. It is definitely a spread betting account and is stated at the top of the window, but I don't know if I need to tell it I want to enter a trade as a spread bet rather than a standard forex trade. Could this be due it being a demo or is there a setting I need to select to alter the trade type get the actual spread betting spread and commission rather than the standard spread? I'm asking here because I have struggled to unearth much on their website.
What’s common between the supermarket & leverage trading (spread betting, CFD, and FX) industries?
Most retail outlets, especially supermarkets, offer popular items such as milk, bread, etc. at extremely low prices and make higher margins through the long tail – branded biscuits, toiletries, etc. These are often referred to as ‘loss leaders’. Other businesses also provide products at a cheap price in order to induce customers to purchase other items. One of the most well-known examples of this is companies selling printers at a loss, but ultimately make money on the ink cartridges. The leverage trading market (Spread Betting, CFD, and FX) shares this principle. Most brokers offer fixed and low spreads on popular indices, commodities and FX, but make more money on the less popular ones, especially equities. Every broker claims to have tight spreads on all assets, but in reality percentage spreads in the case of some assets can be as high as 2%, which will not allow you to adopt most trading strategies. I’ve been spread betting since 2007, and used one broker for almost 5 years until I realised that I could have saved thousands of pounds trading with a different one. Today, I trade from 4-5 accounts, and select broker and financial instruments based on assets that I want to trade in and the time horizon. There is not a 10, 20 or 30 percent difference between the spreads provided by brokers; this figures could in fact go as high as 600% (6x). Here is an analysis of the difference for some popular assets from 13 brokers listed on http://www.CompareSpreadBetting.com Minimising your transaction costs will not only increase your trading returns, but also allow you to adopt new strategies which require tight spreads.
Any redditors interested in Spread Betting? Any of you do it from home? Is there any subreddit for tricks and info on trading? If not, let's create one!
So I'm an economics student at college and some of use have started with spread betting (we're using mycmc.co.uk, anything better?) but we're only on demo accounts (we don't want to start losing money yet :P) When looking for a subreddit dedicated to this, I couldn't find one! Don't you think it would be useful to exchange opinions, tricks, "reddit insider info" and whatelse? Is there any subreddit like this that I just did not find, or should we create it?
If I'm unemployed and I profit more than £12,500 a year (tax-free allowance) trading Forex, will I have to pay income tax on all profits above £12,500?
Also, when do I declare it as income? Does it count as income when my Forex account balance increases, or when I actually withdraw the funds into my bank account? So lets say that I gain £20,000 this year trading Forex, but this stays in my Forex account (I don't withdraw any money into my bank account). Will I have to declare it as income and pay taxes on it? Or is that only if I withdraw the profits into my bank account? (by the way, I am spread betting, therefore there is no stamp duty or capital gains tax).
Unusual Options Activity in AMD, DKNG, INTC, KO, and the banks (BAC, JPM, C)
What’s up fellow scallywag’s, it’s ya boy Swaggy with an update on some unusual options activity caught at the end of last week. Earnings SZN is upon us and the time is now to bring forth our genius into the markets. I’ll go through some of the volume I caught as well as unusual activity. If you want to check out the option tool for yourself, go to SwaggyStocks Option Flow AMD – Advanced Micro Devices AMD caught some momentum Thursday as the stock surged nearly 8%. Big-time call flow came through expecting the stock to be trading at about $60 by mid August. There’s been an uptick in the semi’s as whole (NVDA, MU, INTC) as they are forecasting solid earnings throughout the pandemic as the world goes deeper into the digital rabbit-hole. https://preview.redd.it/waa6l9l0eia51.png?width=2954&format=png&auto=webp&s=4c91c65e472b0cbedb5ea16ec1364461f0253788 DKNG – DraftKings Draftkings stock price has taken a beating over the last couple weeks after reaching all-time-highs earlier in the month. I caught some call buying in August expiration as well as some leaps 2021 leaps. The stock is at short-term lows, looks like the players are expecting a bounce and the DraftKings brand to develop into one of the strongest in the SportsGambling sector. https://preview.redd.it/p6lfh0a4eia51.png?width=2820&format=png&auto=webp&s=8f7fa4b5fd9ceba04c86e6058347745f80fb3f8e KO – Coca Cola Big call buying in Coca Cola (KO) on Friday. 3,700 (900 OI) call contracts for July expiration and a premium paid of $550k. Another trade was in September contracts at the $47 strike price, 7.5k contract for a premium of just under $1 million. Pretty high volume for KO which typically doesn’t have a lot of option flow. Pepsi Co is reporting earnings tomorrow, looks like this could be a proxy play on Pepsi where KO tries to ride some of the momentum. https://preview.redd.it/gbbuv0c6eia51.png?width=2600&format=png&auto=webp&s=060882c26d52ab5fa1299180734ee53eaf836135 INTC – Intel Corporation I caught some interesting activity in INTC on Friday. This play is expecting INTC to report strong and have a good showing into the fall. Here are the two plays I caught. A player purchased a long CALL option at $60 strike and sold the CALL at the $65 strike price, essentially opening a bull debit spread. They then sold PUTS at the $52.5 strike (currently 10% OTM) for a credit of $1.3 million. The exact same play was recognized with another 10k contracts at the same strikes and expiration (October 2020). It’s possible this was all one player, or possible two firms mimicking the first play as the strikes/expiration/volume are all very similar. The players are betting that the stock will stay ABOVE $62 by October, but if the stock price stays anywhere above $52.50-$60 range their losses are limited. https://preview.redd.it/hoylbk3heia51.png?width=2736&format=png&auto=webp&s=0f226af023a53ddf266b16f5dcc3ab3c3d7a38f0 The Banks (JPM, BAC, C) Didn’t spot anything quite unusual with the banks, other than heavy volume going to earnings (I believe all are reporting Tues-Thurs this week). Looks like most of the volume was predominately bullish sentiment, however, in reality it is quite balanced on both sides. The banks have been getting absolutely hammered throughout the Pandemic and haven’t seen much recovery. This is mainly due to new fiscal policies being introduced that look like they are here to stay. Have the banks bottomed? We’ll find out this week. https://preview.redd.it/1ykbro4jeia51.jpg?width=3264&format=pjpg&auto=webp&s=69dca10f7af71ff807544c27f16675fbf4311ea2
Instead of my regular weekly DDDD (Data-Driven DD), this week I'll be going over principles to follow when trading. Principles is how you make sure that you trade based on logic instead of emotions, and prevent yourself from entering stupid positions that you'll regret later on when your portfolio drops 69% in a week. Developing your own principles, based on your own risk tolerance and preferences, and the being disciplined in following them, is the most important thing to ensure you learn from your mistakes and become a better trader to come out profitable in the future. Here are some of the principles I've personally developed over the past few years that I try to follow.
Don’t YOLO (i.e. long options) with more money than you can afford to lose. Imagine going to an actual casino with the same amount of cash - would you be comfortable betting that much money? If the answer is no, don’t do it.
For short term plays, always come in with a thesis, which should contain
A target price
Stop loss price to start exiting strategies
Justification for the thesis using fundamentals
Don’t neglect your exit strategy, both for when you’re right to take profits, and when you’re wrong to stop losses. In both cases, define price levels where you will sell a certain portion of your positions if it hits it and commit to it
You should only enter trades when the reward (i.e. target price) is significantly higher than your stop loss. In other words, the potential reward should be much greater than the max loss, especially for risky trades. If the potential reward is 5x the max loss, you only need to be right 20% of the time to come out ahead.
Time your entries and exits using price levels and technicals; buy at supports and sell at resistances.
A market can be irrational longer than you can remain solvent; If there’s some obvious price dislocation, obvious arbitrage opportunity, or a stock (eg. HTZ, NKLA) where the fundamentals clearly do not meet the current price, don’t try to take advantage of it. In the short term, the only thing that drives stock prices is sentiment and not fundamentals.
Avoid illiquid securities. They typically lead to large bid-ask spreads, which will significantly impact your risk / reward, and can also make it very difficult to exit your strategy, especially when you’re trying to stop losses.
Consider the meme factor of a stock. Just because fundamentals and a company will beat earnings, it doesn’t necessarily mean the stock price will shoot up, especially if the stock is unknown and held mostly by insiders and institutions. On the flip side, stocks that are well known and are actively traded by retail investors will find every reason to skyrocket in bull markets, even if fundamentals do not make sense for it to do so.
Be fearful when others are greedy and be greedy when others are fearful. Use market sentiment, especially with retail investors as a contrarian indicator, with extreme fear or greed as a sign of a reversal. On the other hand, you never want to short a bubble before it’s clear that it has started to pop.
Comment below on any principles not mentioned here that you personally follow! Also, for people who are curious, I'll be posting comments on this post throughout the week my own thoughts on the short-term direction of the stock market and trades that I'll be making.
Learn from my mistake. Greed/cockiness and stupidity has caused a stressful week
Hey my favorite sub reddit. Hope you all are having a better week than me! I am a little stressed right now. I should have listened to you all. For the last 4 weeks, I switched from selling straight naked puts to OTM put credit spreads on high dollar value stocks like; SHOP, GOOG, AMZN. I would have just sold naked on these stocks if I could, as, I love them all and would have no fear of holding them but you need a pretty damn large account to take assignment of stocks worth over $1000-$3000. It was like free money these past 4 weeks selling 4-5% OTM put credit spreads on these high dollar tech companies. And, I started selling weeklies (which I never used to do, always stuck to 45 days out but I figured tech only had so much further to run and thought I was being safer betting that these stocks won't drop 4% in a week rather than a month and a half) I literally made well over 20k Canadian just off those 3 tickers in 4 trading weeks all from spreads At first I would close these spreads out at 50% profit. Then, I realized they always would end up expiring way OTM and I got mad I was "leaving so much money on the table" so I started riding them to expiry. I had sucha good 4 weeks, on Friday I opened up wayyy more spreads on SHOP,AMZN and GOOG than I would be O.K. with losing because I got over confident. I could have closed them all out on Monday when they ALL hit 52 week highs but 40-50% over a weekend returns were not enough for my greedy ass There is still a good chance at least some of these spreads will be winners. I may get lucky and all of them are BUT, I may be in for a massive loss that will wipe up all my last months gains. I have accepted it and am staying positive as I have plenty of cash on the sides and will be able to make it back. This has been a very humbling learning experience. I am going to be MUCH safer after this, even if I end up somehow coming out ok on all of these I wanted to make this post to state not only the obvious, which, is only create spreads that if you end up needing to take a loss, it won't hurt and the second one DO NOT OPEN ALL YOUR SPREADS IN ONE SECTOR. I had been only sticking to 3 or 4 big name tech stocks because they were the "safe havens" I knew it would not last forever and I still risked it. I thought "one more week and I am done with these weeklies and going back to naked puts" I hate spreads because you cannot roll them unless you take on even more risk by widening the strikes. Puts are SO easy to roll for a credit and each time you roll it brings your cost basis down. I may roll some of these for a debit if I have to as I do believe they will rise, esp as earnings approaches but I am not going to take on more risk by widening the strikes I do not think tech is dead, but, it is strange how much it is lagging. I thought with Covid getting worse, people would be rushing to the "safe haven" stocks more but seems value is the winner lately TLDR: Do not get cocky and sell tons of spreads without asking yourself if you lose on every single one, can you stomach that loss? #2, do not sell all your spreads/puts in the same sector. #3 do not sell weeklies EDIT: It is Thursday night and it looks like I am nicely fucked. SHOP plummeted, AMZN too. I just lost all my gains plus several thousand more from the YEAR in one WEEK. I used to laugh when I saw stories like mine on WSB. Like, some guy was up 1million and is now in the red, Now, I understand. Greed is real. When you just keep winning and winning its easy to get over confident
How to not get ruined with Options - Part 3a of 4 - Simple Strategies
Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM Post 2: Basics: Buying and Selling, the Greeks Post 3a: Simple Strategies Post 3b: Advanced Strategies Post 4a: Example of trades (short puts, covered calls, and verticals) Post 4b: Example of trades (calendars and hedges) --- Ok. So I lied. This post was getting way too long, so I had to split in two (3a and 3b) In the previous posts 1 and 2, I explained how to buy and sell options, and how their price is calculated and evolves over time depending on the share price, volatility, and days to expiration. In this post 3a (and the next 3b), I am going to explain in more detail how and when you can use multiple contracts together to create more profitable trades in various market conditions. Just a reminder of the building blocks: You expect that, by expiration, the stock price will … ... go up more than the premium you paid → Buy a call … go down more than the premium you paid → Buy a put ... not go up more than the premium you got paid → Sell a call ... not go down more than the premium you got paid → Sell a put Buying Straight Calls: But why would you buy calls to begin with? Why not just buy the underlying shares? Conversely, why would you buy puts? Why not just short the underlying shares? Let’s take long shares and long calls as an example, but this applies with puts as well. If you were to buy 100 shares of the company ABC currently trading at $20. You would have to spend $2000. Now imagine that the share price goes up to $25, you would now have $2500 worth of shares. Or a 25% profit. If you were convinced that the price would go up, you could instead buy call options ATM or OTM. For example, an ATM call with a strike of $20 might be worth $2 per share, so $200 per contract. You buy 10 contracts for $2000, so the same cost as buying 100 shares. Except that this time, if the share price hits $25 at expiration, each contract is now worth $500, and you now have $5000, for a $3000 gain, or a 150% profit. You could even have bought an OTM call with a strike of $22.50 for a lower premium and an even higher profit. But it is fairly obvious that this method of buying calls is a good way to lose money quickly. When you own shares, the price goes up and down, but as long as the company does not get bankrupt or never recovers, you will always have your shares. Sometimes you just have to be very patient for the shares to come back (buying an index ETF increases your chances there). But by buying $2000 worth of calls, if you are wrong on the direction, the amplitude, or the time, those options become worthless, and it’s a 100% loss, which rarely happens when you buy shares. Now, you could buy only one contract for $200. Except for the premium that you paid, you would have a similar profit curve as buying the shares outright. You have the advantage though that if the stock price dropped to $15, instead of losing $500 by owning the shares, you would only lose the $200 you paid for the premium. However, if you lose these $200 the first month, what about the next month? Are you going to bet $200 again, and again… You can see that buying calls outright is not scalable long term. You need a very strong conviction over a specific period of time. How to buy cheaper shares? Sell Cash Covered Put. Let’s continue on the example above with the company ABC trading at $20. You may think that it is a bit expensive, and you consider that $18 is a more acceptable price for you to own that company. You could sell a put ATM with a $20 strike, for $2. Your break-even point would be $18, i.e. you would start losing money if the share price dropped below $18. But also remember that if you did buy the shares outright, you would have lost more money in case of a price drop, because you did not get a premium to offset that loss. If the price stays above $20, your return for the month will be 11% ($200 / $1800). Note that in this example, we picked the ATM strike of $20, but you could have picked a lower strike for your short put, like an OTM strike of $17.50. Sure, the premium would be lower, maybe $1 per share, but your break-even point would drop from $18 to $16.50 (only 6% return then per month, not too shabby). The option trade will usually be written like this: SELL -1 ABC 100 17 JUL 20 17.5 PUT @ 1.00 This means we sold 1 PUT on ABC, 100 shares per contract, the expiration date is July 17, 2020, and the strike is $17.5, and we sold it for $1 per share (so $100 credit minus fees). With your $20 short put, you will get assigned the shares if the price drops below $20 and you keep it until expiration, however, you will have paid them the equivalent of $18 each (we’ll actually talk more about the assignment later). If your short put expires worthless, you keep the premium, and you may decide to redo the same trade again. The share price may have gone up so much that the new ATM strike does not make you comfortable, and that’s fine as you were not willing to spend more than $18 per share, to begin with, anyway. You will have to wait for some better conditions. This strategy is called a cash covered put. In a taxable account, depending on your broker, you can have it on margin with no cash needed (you will need to have some other positions to provide the buying power). Beware that if you don’t have the cash to cover the shares, it is adding some leverage to your overall position. Make sure you account for all your potential risks at all times. The nice thing about this position is that as long as you are not assigned, you don’t actually need to borrow some money, it won’t cost you anything. In an IRA account, you will need to have the cash available for the assignment (remember in this example, you only need $1800, plus trading fees). Let’s roll! Now one month later, the share price is between $18 and $22, there are few days of expiration left, and you don’t want to be assigned, but you want to continue the same process for next month. You could close the current position, and reopen a new short put, or you could in one single transaction buy back your current short put, and sell another put for next month. Doing one trade instead of two is usually cheaper because you reduce the slippage cost. The closing of the old position and re-opening of a new short position for the next expiration is called rolling the short option (from month to month, but you can also do this with weekly options). The croll can be done a week or even a few days before expiration. Remember to avoid expiration days, and be careful being short an option on ex-dividend dates. When you roll month to month with the same strike, for most cases, you will get some money out of it. However, the farther your strike is from the current share price, the less additional premium you will get (due to the lower extrinsic value on the new option), and it can end up being close to $0. At that point, given the risk incurred, you may prefer to close the trade altogether or just be assigned. During the roll, depending on if the share price moved a bit, you can adjust the roll up or down. For example, you buy back your short put at $18, and you sell a new short put at $17 or $19, or whatever value makes the most sense. Assignment Now, let’s say that the share price finally dropped below $20, and you decided not to roll, or it dropped so much that the roll would not make sense. You ended up getting your shares assigned at a strike price of $18 per share. Note that the assigned share may have a current price much lower than $18 though. If that’s the case, remember that you earned more money than if you bought the shares outright at $20 (at least, you got to keep the $2 premium). And if you rolled multiple times, every premium that you got is additional money in your account. Want to sell at a premium? Sell Covered Calls. You could decide to hold onto the shares that you got at a discount, or you may decide that the stock price is going to go sideways, and you are fine collecting more theta. For example, you could sell a call at a strike of $20, for example for $1 (as it is OTM now given the stock price dropped). SELL -1 ABC 100 17 JUL 20 20 CALL @ 1.00 When close to the expiration time, you can either roll your calls again, the same way that you rolled your puts, as much as you can, or just get assigned if the share price went up. As you get assigned, your shares are called away, and you receive $2000 from the 100 shares at $20 each. Except that you accumulated more money due to all the premiums you got along the way. This sequence of the short put, roll, roll, roll, assignment, the short call, roll, roll, roll, is called the wheel. It is a great strategy to use when the market is trading sideways and volatility is high (like currently). It is a low-risk trade provided that the share you pick is not a risky one (pick a market ETF to start) perfect to get create some income with options. There are two drawbacks though:
If the share dropped too much, you are stuck with it.
You will have to be patient for the share to go back up, but often you can end up with many shares at a loss if the market has been tanking. As a rule of thumb, if I get assigned, I never ever sell a call below my assignment strike minus the premium. In case the market jumps back up, I can get back to my original position, with an additional premium on the way. Market and shares can drop like a stone and bounce back up very quickly (you remember this March and April?), and you really don’t want to lock a loss. Here is a very quick example of something to not do: Assigned at $18, current price is $15, sell a call at $16 for $1, share goes back up to $22. I get assigned at $16. In summary, I bought a share at $18, and sold it at $17 ($16 + $1 premium), I lost $1 between the two assignments. That’s bad.
If the share goes up too fast, you missed some opportunity for gain, potentially big gains.
You will have to find some other companies to do the wheel on. If it softens the blow a bit, your retirement account may be purely long, so you’ll not have totally missed the upside anyway. A short put is a bullish position. A short call is a bearish position. Alternating between the two gives you a strategy looking for a reversion to the mean. Both of these positions are positive theta, and negative vega (see part 2). Now that I explained the advantage of the long calls and puts, and how to use short calls and puts, we can explore a combination of both. Verticals Most option beginners are going to use long calls (or even puts). They are going to gain some money here and there, but for most parts, they will lose money. It is worse if they profited a bit at the beginning, they became confident, bet a bigger amount, and ended up losing a lot. They either buy too much (50% of my account on this call trade that can’t fail), too high of a volatility (got to buy those NKLA calls or puts), or too short / too long of an expiration (I don’t want to lose theta, or I overspent on theta). As we discussed earlier, a straight long call or put is one of the worst positions to be in. You are significantly negative theta and positive vega. But if you take a step back, you will realize that not accounting for the premium, buying a call gives you the upside of stock up to the infinity (and buying a put gives you the upside of the stock going to $0). But in reality, you rarely are betting that the stock will go to infinity (or to $0). You are often just betting that the stock will go up (or down) by X%. Although the stock could go up (or down) by more than X%, you intuitively understand that there is a smaller chance for this to happen. Options are giving you leverage already, you don’t need to target even more gain. More importantly, you probably should not pay for a profit/risk profile that you don’t think is going to happen. Enter verticals. It is a combination of long and short calls (or puts). Say, the company ABC trades at $20, you want to take a bullish position, and the ATM call is $2. You probably would be happy if the stock reaches $25, and you don’t think that it will go much higher than that. You can buy a $20 call for $2, and sell a $25 call for $0.65. You will get the upside from $20 to $25, and you let someone else take the $25 to infinity range (highly improbable). The cost is $1.35 per share ($2.00 - $0.65). BUY +1 VERTICAL ABC 100 17 JUL 20 20/25 CALL @ 1.35 This position is interesting for multiple reasons. First, you still get the most probable range for profitability ($20 to $25). Your cost is $1.35 so 33% cheaper than the long call, and your max profit is $5 - $1.35 = $3.65. So your max gain is 270% of the risked amount, and this is for only a 25% increase in the stock price. This is really good already. You reduced your dependency on theta and vega, because the short side of the vertical is reducing your long side’s. You let someone else pay for it. Another advantage is that it limits your max profit, and it is not a bad thing. Why is it a good thing? Because it is too easy to be greedy and always wanting and hoping for more profit. The share reached $25. What about $30? It reached $30, what about $35? Dang it dropped back to $20, I should have sold everything at the top, now my call expires worthless. But with a vertical, you know the max gain, and you paid a premium for an exact profit/risk profile. As soon as you enter the vertical, you could enter a close order at 90% of the max value (buy at $1.35, sell at $4.50), good till to cancel, and you hope that the trade will eventually be executed. It can only hit 100% profit at expiration, so you have to target a bit less to get out as soon as you can once you have a good enough profit. This way you lock your profit, and you have no risk anymore in case the market drops afterwards. These verticals (also called spreads) can be bullish or bearish and constructed as debit (you pay some money) or credit (you get paid some money). The debit or credit versions are equivalent, the credit version has a bit of a higher chance to get assigned sooner, but as long as you check the extrinsic value, ex-dividend date, and are not too deep ITM you will be fine. I personally prefer getting paid some money, I like having a bigger balance and never have to pay for margin. :) Here are the 4 trades for a $20 share price: CALL BUY 20 ATM / SELL 25 OTM - Bullish spread - Debit CALL BUY 25 OTM / SELL 20 ATM - Bearish spread - Credit PUT BUY 20 ATM / SELL 25 ITM - Bullish spread - Credit PUT BUY 25 ITM / SELL 20 ATM - Bearish spread - Debit Because both bullish trades are equivalent, you will notice that they both have the same profit/risk profile (despite having different debit and credit prices due to the OTM/ITM differences). Same for the bearish trades. Remember that the cost of an ITM option is greater than ATM, which in turn is greater than an OTM. And that relationship is what makes a vertical a credit or a debit. I understand that it can be a lot to take in. Let’s take a step back here. I picked a $20/$25 vertical, but with the share price at $20, I could have a similar $5 spread with $15/$20 (with the same 4 constructs). Or instead of 1 vertical $20/$25, I could have bought 5 verticals $20/$21. This is a $5 range as well, except that it has a higher probability for the share to be above $21. However, it also means that the spread will be more expensive (you’ll have to play with your broker tool to understand this better), and it also increases the trading fees and potentially overall slippage, as you have 5 times more contracts. Or you could even decide to pick OTM $25/$30, which would be even cheaper. In this case, you don’t need the share to reach $30 to get a lot of profit. The contracts will be much cheaper (for example, like $0.40 per share), and if the share price goes up to $25 quickly long before expiration, the vertical could be worth $1.00, and you would have 150% of profit without the share having to reach $30. If you decide to trade these verticals the first few times, look a lot at the numbers before you trade to make sure you are not making a mistake. With a debit vertical, the most you can lose per contract is the premium you paid. With a credit vertical, the most you can lose is the difference between your strikes, minus the premium you received. One last but important note about verticals: If your short side is too deep ITM, you may be assigned. It happens. If you bought some vertical with a high strike value, for example: SELL +20 VERTICAL SPY 100 17 JUL 20 350/351 PUT @ 0.95 Here, not accounting for trading fees and slippage, you paid $0.95 per share for 20 contracts that will be worth $1 per share if SPY is less than $350 by mid-July, which is pretty certain. That’s a 5% return in 4 weeks (in reality, the trading fees are going to reduce most of that). Your actual risk on this trade is $1900 (20 contracts * 100 shares * $0.95) plus trading fees. That’s a small trade, however the underlying instrument you are controlling is much more than that. Let’s see this in more detail: You enter the trade with a $1900 potential max loss, and you get assigned on the short put side (strike of $350) after a few weeks. Someone paid expensive puts and exercised 20 puts with a strike of $350 on their existing SPY shares (2000 of them, 20 contracts * 100 shares). You will suddenly receive 2000 shares on your account, that you paid $350 each. Thus your balance is going to show -$700,000 (you have 2000 shares to balance that). If that happens to you: DON’T PANIC. BREATHE. YOU ARE FINE. You owe $700k to your broker, but you have roughly the same amount in shares anyway. You are STILL protected by your long $351 puts. If the share price goes up by $1, you gain $2000 from the shares, but your long $351 put will lose $2000. Nothing changed. If the share price goes down by $1, you lose $2000 from the shares, but your long $350 put will gain $2000. Nothing changed. Just close your position nicely by selling your shares first, and just after selling your puts. Some brokers can do that in one single trade (put based covered stock). Don’t let the panic set in. Remember that you are hedged. Don’t forget about the slippage, don’t let the market makers take advantage of your panic. Worst case scenario, if you use a quality broker with good customer service, call them, and they will close your position for you, especially if this happens in an IRA. The reason I am insisting so much on this is because of last week’s event. Yes, the RH platform may have shown incorrect numbers for a while, but before you trade options you need to understand the various edge cases. Again if this happens to you, don’t panic, breathe, and please be safe. This concludes my post 3a. We talked about the trade-offs between buying shares, buying calls instead, selling puts to get some premium to buy some shares at a cheaper price, rolling your short puts, getting your puts assigned, selling calls to get some additional money in sideways markets, rolling your short calls, having your calls assigned too. We talked about the wheel, being this whole sequence spanning multiple months. After that, we discussed the concept of verticals, with bullish and bearish spreads that can be either built as a debit or a credit. And if there is one thing you need to learn from this, avoid buying straight calls or puts but use verticals instead, especially if the volatility is very high. And do not ever sell naked calls, again use verticals. The next post will explain more advanced and interesting option strategies. --- Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM Post 2: Basics: Buying and Selling, the greeks Post 3a: Simple Strategies Post 3b: Advanced Strategies Post 4a: Example of trades (short puts, covered calls, and verticals) Post 4b: Example of trades (calendars and hedges)
A Basic Introduction to Vertical Spreads - Stop Losing Money When You Predict the Correct Direction
Vertical Spread Basics Spreads often get a bad rap for sounding more complex than they end up being. I’d wager quite a few people here don’t even know what the “Select” button is for at the top right of the options screen on Robinhood. I see over and over people losing their money with puts or calls when a vertical spread would have accomplished the same thing but better. To keep this basic I will stick to vertical spreads (both credit and debit) and a bit about Iron Condors, and once that’s done I’ll go into a bit of detail about when and where I use them. A vertical option spread is purchasing two options; one you’re buying and one you’re selling. You’re literally trading based on the difference between the two option prices. For example, if I bought a SPY 300c 6/3 and sold a SPY 305c 6/3, I would have a SPY 6/3 305/300 Call Debit Spread. What do we accomplish by both buying and selling the right to 100 shares of SPY though? The short answer: This defines our risk. This can seem kind of difficult to comprehend, but it’s fairly simple: The value of the spread can never be more than the difference between the two strike prices. For the above mentioned trade, we can currently purchase a SPY 6/3 305/300 Call Debit Spread for $0.65 per share ($0.65*100=$65), meaning that the difference in price between the 305c and the 300c is $0.65. If SPY finishes above $305 on 6/3, our 300c we bought finishes in the money as does the 305c we sold, which means the spread between the two option prices has reached its maximum of $5.00. We can now purchase 100 shares of SPY at $300 then sell them to the holder of the option we sold for $305, netting $5 per share for a neat $500. This means that we can make up to $500-$65 = $435 on the trade, a tidy 769% profit. If you take anything away from this write up, please take this: An easy way to view a SPY 6/3 305/300 Call Debit Spread is then that you’re betting $65 to win $500 as long as SPY ends above $305 on 6/3. If you’re not starting to see why vertical spreads are more intuitive than single calls or puts then I encourage you to look back over the paragraph above. The Greeks still matter a lot, but the trade can easily be distilled to the above sentence which is not the case with a single option. I continually see people buying calls and puts, correctly predicting the direction of the market, and still losing money due to IV deterioration or the price not moving enough in the right direction. Vertical spreads simplify the trade by making it only as complicated as you want it to be. If you simply want to bet that a stock will go up over the next month, just set the strikes up to straddle the current price, for example, a SPY 290/280 Call Debit spread. Similarly if you wanted to be against the market, you would do the same thing but by buying a 290 put and selling a 280 put making a SPY 290/280 Put Spread. A credit spread is very similar to a debit spread but inverted. To create a SPY 6/3 300/305 Call Credit spread, we would sell a 300c and buy a 305c, and because we’re selling the more valuable contract (the lower the strike price the more valuable the call), we get a net credit instead of a net debit, meaning we receive money in our account rather than pay it. That means just like when we short a stock, to close the position we need to pay money rather than receive it. With a call credit spread, we’re now betting against the market: If SPY stays below $300 on 6/3, the credit we received when we sold spread stays ours forever since both the 300c we sold and the 305c we bought expired worthless. You’re still betting on the spread between the two option prices, but now you’re betting on the differences between the two going to 0 rather than the maximum. Now, if the position moves against us and SPY finishes above $305 on 6/3, our SPY 300c we sold will exercise and we will pay for those 100 shares with our 100 shares we receive from our 305c, meaning that we pay at maximum $500. NOTE: Robinhood will hold the maximum you can lose as collateral just in case your trade goes poorly, so if you receive a credit of $65 on the trade, you’ll effectively have another $435 locked up until you close the trade. Until now I have assumed that the underlying stock price will always finish outside of the range of your spread which has made things a little cleaner. In reality, if you should choose to hold until expiration and the underlying price is between the two strikes, one of your options will exercise and the other will expire worthless. For example, if on 6/3 SPY ended at $303, for our SPY 6/3 305/300 Debit Spread our 300c would exercise and we would have 100 shares of SPY purchased at $300, netting us $3 per share. Considering that most people in this sub could not handle a purchase of 100 shares of SPY at $300, Robinhood will exercise your spread an hour before close at market prices (which is why I will always sell before this point since you can do a lot better than market prices most of the time). Basics Summary Thus ends the basic portion of the write up. The benefits of vertical spreads are:
Defined risk just like calls and puts
Much simpler to conceptualize profitable scenarios
Requires less capital than calls and puts in cases where share prices are high (TSLA and AMZN). This is due to the fact that you’re playing the difference between option prices and not the ability to sell 100 shares of the underlying.
Options Profit Calculator is a very useful resource for learning not only vertical spreads but any options and I highly recommend playing around with it if you’re new to options: https://www.optionsprofitcalculator.com/ Details and Tips
Liquidity: Spreads are inherently less liquid than single options since it's twice as many transactions (even if it doesn’t seem like it since you’re paying for it all at once). You’ll find that until single options, it is more difficult to get prices that are in the midpoint of the bid-ask spread, meaning you’ll have to pay more for debit spreads and get less credit in credit spreads when opening the positions and vice versa when closing the position. What this means is that it is important to trade options that have high volume, and as a result, low bid-ask spreads. I’ve been burned in the past by purchasing PLNT spreads and losing $100 when purchasing and selling, so I stick to highly traded securities such as SPY, DIS, AAPL, BA, etc. I also always trade on $5 increments when I can help it, since $5 increments are nearly always more liquid than any other strike.
Risk and Reward: There are a lot of knobs to play with if you want more or less risky spreads. Clearly the further OTM your spread is the less you’re paying for that spread and the higher the reward is, which also goes for ITM being more costly as less reward. Wider spreads between the two strikes gives you a larger zone of “medium” rewards whereas tighter spreads create a more all-or-nothing reward structure. I don’t have too much more to say here, if you want to know more about this, play with Options Profit Calculator linked above.
Impact of Implied Volatility: One of the chief benefits of vertical spreads is that we’re avoiding the largest effects of changes in IV since it hits both the leg that we are long as well as the leg we are short. IV still impacts spreads though, since increases in IV cause spreads to increase due to larger expected moves, and contractions in IV cause decreases in IV for opposite reasons. All this means is that we want to use Debit Spreads when we expect IV to increase and Credit Spreads when we expect it to decrease.
Theta: You’ll hear a lot about people saying that theta works for you in a credit spread and against you in a debit spread. This is technically true, since as theta causes option values to tick down, spreads tighten by nature. In reality though, theta only really hurts your debit spreads when they are OTM. Believe me, you’ll still be feeling the theta burn if your credit spread is OTM as you watch your 5/15 SPY 300/305 Put Credit Spread become less and less likely to be ITM. It’s one of the reasons why Iron Condors are set up with two credit spreads, one capping the range and one creating a floor: You want theta to be working for you in both cases (since both are ITM).
Uneven Payouts: I couldn’t find a better term to use for this, but you’ll find that especially for underlyings that have significant upward expectations, you’ll get “more value” out of betting on a downward move. For example, for a SPY 290/280 Call Debit Spread, you’ll pay $6.24 even though SPY nearly right in the middle after closing at $284.97. If there was no expectation of upward movement we would find that a $10 strike debit spread perfectly centered on the current price would cost $5.00, but that is not the case. This spread functions as an interesting indicator of current market sentiment, but it functions more as a lagging indicator than a leading one, which means that betting on upward moves is much more cost effective after a large drop (such as if you’d made bullish bets during the drop over the past few days).
Entering a Position: I’ve found that two things hurt me when I’m entering a position: Giving up too much value when picking a bid, and being too patient in filling my bid. Robinhood is pretty shit at showing you the actual bid-ask spread for a vertical spread, so I like to start bidding at slightly lower than the midpoint of the bid-ask and slowly canceling and reordering the position, upping the purchasing point each time I do. This way I don’t accidentally lose $20 of value by accepting a worse ask than I needed to while also not giving my position time to move while I’m not in it yet. Spreads are surprisingly frustrating to enter when you’re inexperienced, and I’ve certainly given up a thousand or two in fucked up entrances over the past few months. My advice would be to not skimp on planning your entrance.
When to Close Position: I dislike holding my winning plays until expiration for multiple reasons. When the underlying finishes between the strikes of your spread, you end up exposed to pin risk as you can’t sell out of your long/short position until the market opens. I personally also don’t like having the risk that a sudden change in the underlying can cause a winning position to suddenly shift into a losing one, so I usually don’t look for more than 95% gains on a single position and exit out once that has been achieved.
Iron Condors: The only strategy I’ll talk about other than vertical spreads in this writeup since they’re also fairly basic in execution. Iron Condors involve two credit spreads: A call credit spread which forms a cap and a put credit spread which forms a floor. With an Iron Condor you’re betting that the underlying will expire between the two spreads. For example, I currently hold a 6/19 275-300 Iron Condor that consists of a 270/275 Put Credit Spread and a 300/305 Call Credit Spread. While the idea here is basic, realistically you’re not holding an Iron Condor to expiration every time, so it's important to experiment with how the value of an Iron Condor valuation changes as it matures. Taking a look at a theta decay curve will show you where you should expect most of the value to come from. The another big Greek to consider for an Iron Condor is Delta. The delta of an Iron Condor is determined by simply adding the delta of each position within the Iron Condor (short positions are negative delta). Since the expectation for SPY is that the underlying will go up over time, a zero delta Iron Condor (hedged against price movements at time of purchase) will be significantly lower than the midpoint between the two spreads of the IC. I personally like a bit of negative delta in this environment since you end up making money when the underlying decreases and IV increases due to delta, and you also make money when the underlying increases and IV decreases. One last thing to consider when opening and closing an Iron Condor is that it is purchasing two spreads at once, which means that it requires even more liquidity than spreads do to trade profitably. Since you have to buy these so close to the ask and sell so close to the bid, Iron Condors work much better as trades to hold over a period of at least a week. This isn't to say I haven't bought and sold an Iron Condor over a one day stretch, but its certainly not optimal.
Alright this got a bit long, and there's more to talk about, but I’ll stop here. DISCLAIMER: Now that you’ve read this post, I'll admit I’ve only been actively trading for about three months. I just finished a Finance undergrad and I've been investing unsuccessfully for five years until this point where I’m finally up about 100% from when I started over something silly like 100 trades. I’m not gonna post all of my past positions, but my current positions can be found here. Suffice to say that I made a ton off bearish spreads and it was a rude reeducation that made me learn it was necessary to play both sides of the market. TL;DR: Spreads are easier to conceptualize, don’t worry as much about IV and theta, have defined risk, and require less capital than puts/calls. An easy way to view a SPY 6/3 305/300 Call Debit Spread is then that you’re betting $65 to win $500 as long as SPY ends above $305 on 6/3.
Script for "History of the entire world I guess" by Bill wurtz
hi, you're on a rock floating in space. pretty cool, huh? some of it's water. fuck it. actually, most of it's water. i can't even get from here to there without buying a boat. it's sad. i'm sad. i miss you. HOW DID THIS HAPPEN? a long time ago... actually, never. and also now. nothing is nowhere. when? never. makes sense, right? like i said, it didn't happen. nothing was never anywhere. that's why it's been everywhere. it's been so "everywhere," you don't need a "where." you don't even need a "when." that's how "every" it gets. forget this. i wanna be something. go somewhere. do something. i want things to change. i want to invent time and space. and i know it's possible because everything is here, and it probably already happened. i just don't know when to start. and that's exactly where it started. big bang— pause woah. i paused it. i think there's a universe now. what's it made of? quarks and stuff. ah, that's a thing! in a place! don't like it? try a new place, at a different Time™. try to stick together, because the world is gonna get bigger and emptier. but it's not empty yet! it's still very full, and about a kjghpillion degrees. about no seconds later great news! the quarks are now happily married in groups of three, called a "proton" and a "neutron." and there's something else flying around that wants to join in, but can't cause it's too HOT. ten minutes later great news! the protons and neutrons are now happily married to each other! some of them even doubled up. about 380,000 years later great news! the electrons have now joined in. congratulations! the world is now... a bunch of gas in space. but it's getting closer together... ten million years later and it's getting closer together... 500 million years later and it's getting closer togeth—star is born it's a star new shit just got made! some stars burn out and die. bigger stars burn out and die with passion! and make some brand new way crazier shit. space dust! which allows for newer and more interesting stars to be made, and then die and explode into even crazier space dust! so now, stars have cool stuff around them, like rocks, ice, and funny clouds, which can make some very interesting things. like this ball of flaming rocks, for example. meteor hits earth holy shit, we just got hit by another ball of flaming rocks. and it kind of... made a mess. which is now the moon weather update: it's raining rocks from outer space. weather update: those rocks might've had water inside of them and now there's hot steam in the sky. weather update: cooler temperatures today and the floor is no longer lava. weather update... it's raining. severe flooding alert, the entire world is now an ocean. volcano alert. that's land! there'slifeintheocean what? something's alive in the ocean oh, cool. like a plant, or an animal? no! a microscopic speck. it lives in the bottom of the ocean and eats chemical soup, which is being served hot and fresh, made from gnarly space ingredients left over from when it was raining rocks or whatever. microscopic speck asexually reproduces oh yeah, and it can do that. reproduces three more times it has secret instructions written inside itself telling it how to build another one of itself. so that's pretty nifty, i would say. tired of living at the bottom of the ocean? now you can eat sunlight! using a revolutionary technique, you can convert sunlight into food. taste the sun! side effect, now there's oxygen everywhere and the sky is blue. then the earth might've been a snowball for a while. maybe even a couple of times. it's a sponge... it's a plant... it's a worm, and some other types of weird strange water bugs and strange fish. it's the Cambrian explosion: "wow, that's animals and stuff" but we're still in the ocean. hey, can we go on land? NO why? the sun is a deadly laser oh okay. not anymore, there's a blanket now the animals can go on land. come on, animals, let's go on land! "nope, can't walk yet." "and there's no food yet, so i don't care." 100 million years later okay, will you learn to walk if there's plants up here? "maybe," said some bugs. and fish. fish gasps for air five million years later okay, so i can go on land, but i have to go back in the water to have babies! idea: learn to use an egg. "i was already doing that" use a stronger egg. put water in it. have a baby, on land, in an egg. water is in the egg. baby, in the egg, in the water, in the egg. works for me. bye bye ocean 50 million years later and now everything's huge. including bugs. wanna see a map of the land? sure. Permian extinction oh, fuck, now everything's dead. just kidding, here are the survivors. keep your eye on this one, because it's about to become 75 million years later the dinosaurs. here's another map of the land. yeah, it broke apart. don't worry about it, it does that all the time. here comes a meteor. meteor strikes and the dinosaurs are gone it's mammal time, here come the mammals. look at those breasts. now they're gonna dominate the world, but one of them just learned how to grab stuff. and walk. no, like, walk like that. and grab stuff at the same time. and bang rocks together to make pointed rocks. "ouch" and set things on fire. "yeouch" and make crazy sounds with their voice: "gneurshk" which can mean different things. that's a human person! and now they're everywhere. almost. ice age! what? you can walk over here? cool. not anymore well i guess we're stuck here now. let's review: there's people on the planet. and they're chasing their food. fuck it. time to plant some grass. look at this. i get to control the food now. now everyone will want to be my friend and live near me. let's all build houses, except mine is bigger because i own the food. this is great! i wonder if anyone else is doing this. tired of using rocks for everything? use metal. it's underground. better farming was just invented in a sweet dank valley right in between these two rivers, and the animals are helping. guess what happens next? more food. and more people, who came to buy the food. now you need people to help make the food and keep track of the sales. and now you need houses for people to live in and people to make the houses and now there's more people and they invent things which makes things better and more people come and there's more farming and more people to make more things for more people and now there's business, money, writing, laws, power, Society coming soon to a dank river valley near you. meanwhile, out in the middle of nowhere, the horse is probably being tamed. why is all my metal so lame and lumpy? tired of using lame, sad metal? introducing: bronze. made from special ingredient tin from the far lands of Tin Land. i dunno, my dealer won't tell me where he gets it. also, guess what? egypt meanwhile, out in the middle of nowhere, they figured out how to put wheels on a horse. now we're getting somewhere. also, china and did i mention indus river valley civilization society count: 5 ... norte chico the middle east is getting more complicated. maybe because it's in the middle of the east. knock knock, er, clop clop. it's the... people with the horses? and they made an empire. and then everyone else copied their horses. greeks! ah look, it must be the greeks! er, a beta version of the greeks. let's check in with the indus river valley civilization: they're gone. guess who's not gone? china. new arrivals from india... maybe it's those horse people i was talking about... or their cousins or something... and they wrote some hymns and mantras and stuff... you could make a religion out of this. there's the bronze age collapse. now the phoenicians can get down to business also, can we switch to a metal that's a little easier to find? thanks. look who came back to israel, it's the twelve tribes of israel. and they believe in God just one though, and he's got like a ten-step program. here's some huge heads. must be the olmecs. the phoenicians make some colonies. the greeks copy their idea and make some colonies. the phoenicians made a colony so big it makes colonies. here comes the assyrian empire. never mind, it's the babyloni— media—it's the Persian Empire: "wow, that's big" enlightenment ah, the buddha was just enlightened. who's the buddha? this guy, who sat under a tree for so long that he figured out how to ignore the fact that we're all dying. you could make a religion out of this. oops, china just broke. but while it was breaking, confucius was figuring out how to have good morals. enlightenment ah, the greeks just had the idea of thinking about stuff. and right over here, alexander just had the idea of conquering the entire persian empire. it's a great idea. he was... great. and now he's dead. hopefully, the rest of the gang will be able to share the empire evenly between them. knock knock, it's chandragupta. he says "get the hell out of here. will you get the hell out of here if i give you 500 elephants? okay, thanks, bye" time to conquer all of india er most of india but what about this part? that's the tamil kings. no one conquers the tamil kings. who are the tamil kings? merchants, probably. and they've got spices! who would like to buy the spices? "me!" said the arabians, swiftly buying it and selling it to the rest of the world. hey, china put itself back together again, with good morals as their main philosophy. actually, they have three main philosophies: confucianism: have good morals taoism: go with the flow legalism: fuck you, obey the law out here, the horse nomads run wild and free, and they would like to ransack your city. nomads ransack china let's check the greekification levels of the greekified kingdoms: greekification overload. bye, said the parthians. bye, said the jews. hi, said the parthians, taking over the entire place. heyyyyy, said the romans, eating the entire mediterranean for breakfast. "thanks for invading our homeland," said the jews, who were starting to get tired of people invading their homeland. "hi, everything's great," said some guy who seems to be getting very popular and is then arrested and killed for being too popular, which actually makes him more popular. you could make a religion out of this. want silk? now you can buy it from china. they just made a brand new road to the world. conquers vietnam or you can get there on water "sick! new trade routes!" said india, accidentally spreading their religion to the entire southeast. hmm, that's a good place for an epic trading kingdom. there goes buddhism, travelling up the silk road. i wonder if it'll reach china before it collapses again. remember the persian empire? yep, said the persians, making a new one. axum is getting so powerful, they would like to build a long stick. has anyone populated madagascar yet? let's do it together. china is whole again... ...then it broke again still can't cross the sahara desert? try camels. "hell yeah! now we've got business," said the ghana empire, selling lots of gold. and slaves. "hi, i'm a member of the roman empire, and i was wondering is loving jesus legal yet?" "no" "actually, okay sure," said constantine, moving the capital way over here to be closer to his main rival. don't worry about rome, it won't fall. it's the golden age of india there's the gupta empire, not chandragupta, just gupta. first name chandra. the first. guess who's in rome? barbarians. what's a barbarian? "non-romans," said the romans, being invaded by non-romans. r.i.p. roman empire. actually just half of it, the other half is just fine, but it's not in rome anymore, so let's give it a new name. the mayans have figured out the stars oh, and here's a huge city, population: everyone. the göktürks have taken over the entire eurasian steppe. great job, göktürks. how's india? broken. how's china? back together. how's those trading kingdoms? bigger, and there's more of them. korea has three kingdoms. japan has a kingdom, it's the sunrise kingdom. intermission deep in the arabian desert, on the top of a mountain, the real god whispers in muhammad's ear. so, he goes down to the cube where everyone worships gods and he tells them their gods are all fake. and everyone got so mad at him that he had to leave town and go to a different town. you could make a religion out of this, and maybe conquer the world as well. the roman empire is long gone, but somehow the pope is still the pope. plus, there's new kingdoms all over europe. i wonder if there's room for moors. here's all the wisdom. in a house. it's the baghdad house of wisdom! just in time for the islamic golden age! "let's bring stuff to the coast and sell it, and become the swahili on the swahili coast," said the swahili on the swahili coast. remember this tiny space you have to go through to get from here to there? someone owns that now. wanna get enlightened in the middle of nowhere? the franks have the biggest kingdom in europe, and the pope is so proud that he invites the king over for christmas. "surprise! you're the new roman emporer!" said the pope, pretending to still be part of the roman empire. then the franks broke their kingdom into what will later be called france and not-france. the northerners, er, just "norse" if you don't have much time, are exploring. they go north, from the north to the northern north. and they find some land— two types of land!— and they name them accordingly. prankd they also invade some other places and get called many names, such as "vikings." there's the rus! the kievan rus! are they vikings? "i don't think so," said the kievan rus. okay, fair enough. the pope is ready to make some more emperors of the roman empire. the holy roman empire! it's actually germany, but don't worry about it. new kingdoms—CRISTIANIZE ALL THE KINGDOMS!! which brand would you like? "mine's better" "mine's better" "mine's better" "time to conquer england," said william. it's a bird! it's a plane! it's the seljuk turks! "aah!" said the byzantine empire, who's getting so small and almost doesn't exist anymore. "we need help!" they need help! so they call the pope. "hey pope, can you help us get rid of the seljuks? maybe take back the holy land on the way? come on, i know you want to take back the holy land." "yes, i do actually want to do that. let's do a crusade." crusade! they did many crusades. some of which almost didn't fail. but at least the italians got some sweet trade deals. goodbye mayans. hello toltecs! goodbye toltecs. hello mississippi! look at those mounds. there's the pueblo. i always wondered how to build a town in a cliff. guess who's here? khmer. where? here! and pagan is there. vietnam unconquered itself, korea just became itself, and japan is so addicted to art that the military might have to take over the government. china just invented bombs, and typing. and the mongols just invaded most of the universe. nice going, genghis! i bet that will last a long time. some of the islamic turks were unaffected by the mongol invasions because they were busy invading india. is it tonga time? i think it's tonga time. i just figured out where the swahili gets all of their gold. look at this chad! it means "lake." there's an empire there! right in the middle of africa! the king of mali is so rich, he's going on tour to let everyone know. "wow, that guy's rich," everyone said. the christians are doing a great job reconquering iberia, which will soon be called spain and not-spain. please remain christian. we will check in later to see if you're still christian when you least expect. whoops, half of europe just died. ming! china's back, yay! hey, khmer. time to share. new kingdoms, here and there. oh, look who controls all of the islands. it's the mahajapit. majahapit. mapajahit. mahapajit. mapajahit. ma-ja-pa-hit? oh, italy's real rich. time for them to care a lot about art and the ancient classics. it's kinda like a rebirth. here's a printer. let's make books! so you think you can conquer the byzantine empire? yep, said the ottoman turks. nice job, ottoman turks. oops, you missed a spot. don't forget to ban europe from the indian spice trade. "what? that's bullshit," said portugal, spiceless. "well i guess we'll have to find another way to india" "wait!" said christopher columbus, probably smoking crack. "if the world is round, let's go this way to india." "nah, don't worry, we already got this," said portugal. so chris goes to spain. "hey spain, wanna hire me to find india by going around back of the world?" "no" "please?" "no" "please?" "wtf" "no" "please?" "...okay" so he sails into the ocean, and discovers... more ocean. and then discovers the indies, and japan! let's draw a line to decide who gets which half of the world. the aztec and the inca empires are off to a great start. i wonder if they know that europe just discovered their continent. the hapsburgs are marrying into so many royal families, they might have to start marrying each other. move over, lithuania, here comes moscow. ivan wants to make russia great again. move over, timurids, maybe go invade india or something. persia just made persia persian again. let's make it the other kind of islam. the one where we thought the first guy should've been the other guy. hey, christians! do you sin? now you can buy your way out of hell! "that's bullshit. this whole thing is bullshit. that's a scam. fuck the church. here's 95 reasons why," said martin luther, in his new book which might have accidentally started the protestant reformation. "you know what would be magnificent?" said suleiman wearing an onion hat. "what if the ottoman empire was... really big?" which it is now. "what if russia was big?" said ivan, trying not to be terrible. portugal had a dream that they controlled the entire indian ocean, including the spice trade. and then that dream was real. and spain realized that this is not india, but they pillaged it anyway. "damn," said england and france. "we gotta start pillaging some stuff." then the dutch revolt, and all the hipsters moved to amsterdam. "damn," said amsterdam. "we gotta start pillaging some stuff." question one: can you get to india from north america? no, but at least there's beaver. question two: steal the spice trade. that's not a question, but the dutch did it anyway. and sugar... guess where all of the sugar is made? in brazil! stolen! in the caribbean! and it's so goddamn profitable, you might forget to not do slavery. the next thing on russia's to-do list is to get bigger. britain and france are having a friendly discussion about who should control the entire world. more specifically, ohio. then it escalates into a seven-year discussion, giving prussia a chance to show austria who's boss. but what about britain and france, did they figure out who's boss? yes they did! it's britain. guess who's broke? also britain! so they start taxing the hell out of america. "fuck you!" says america, declaring their independence and fighting for it, and france helps them win. now france is broke, and britain will have to send their prisoners to a different continent. wait, if france is broke, why do the king and queen still wear such fancy dresses? "let's overthrow the palace and cut all their heads off!" said robespierre, cutting everybody's heads off until someone eventually got mad and cut his head off. you could make a rel— no, don't. haiti is starting to like the idea of a revolution, especially the slaves, who free themselves by killing their masters. "why didn't we think of this before?" wait, who's in charge of france now? "me," said napoleon, trying to take over europe. luckily, they banished him to an island. but he came back! luckily, they banished him to another island. there goes latin america, becoming independent in the latin american wars of independence. britain just figured out how to turn steam into power, so now they can make many different types of machines and factories with machines in them so they can make a lot of products real fast. then they invent some trains. and conquer india and maybe put some trains there. "hey, china!" said britain. "buy stuff from us!" "nah, dude, we already got everything," says china. so britain tried to get them addicted to opium, which worked, actually. but then china made it illegal and dumped it all into the sea. so britain threw a hissy fit and made them open up five cities and give them an island. britain and russia are playing a game where they try to stop the other person from conquering afghanistan. also, the sultan of oman lives in zanzibar now: "that's just where he lives." india just had a revolution, and they would like to govern themselves now. "nope," said britain, governing them even harder than before. incoming telegram: HI I JUST SENT YOU A MESSAGE THRU A WIRE technology is about to go crazy! the united states finally figured out whether slavery is good or bad. it's bad, they decided, and then they continued manifesting their destiny, which is to kill the rest of the natives and take their land and maybe kick out the mexicans too. "i know! let's rape africa!" said europe, scrambling to see who could rape it the fastest. they never got ethiopia... britain and france are still hungry. they never got thailand... the united states ran out of destiny to manifest, so they're looking for more: hawaii! cuba! wait, spain controls cuba. well, blame something on them and go to war! what should we blame on spain? u.s.s. maine sinks "let's blame the maine on spain." so they blame the maine on spain. now we're in business. to celebrate, they kick panama out of panama and make a canal, connecting the two oceans. britain just found oil in the middle east. it makes cars go... china is so tired of being bossed around that they delete their old government and make a new, stronger government, which is accidentally weaker and is controlled by a guy from the previous government. europe hasn't had a war since the last war, so they start world war one. look at those guns! it's gonna be a great war, so great we won't need a second one. after it's over, they blame germany. russia went on strike, and the workers overthrew the government. now, everyone's paycheck is the same. communism in the soviet union... the arabs revolt and britain helps. now the ottoman empire is gone, so we can give the jewish people a place to live. hopefully the arabs won't mind. "let's cut the cake!" said sykes and picot, carving up the remains of the not-so-ottoman-anymore-empire. except turkey! turkey makes a brand new turkey! and then the saudis conquer arabia. it just seemed like the right thing to do. phone rings hello? yes, it's the 1920's calling. let's get to a car and drive to a party and listen to jazz on the radio and go to the movies. the economy is great and it will probably be great forever. just kidding. germany's back, featuring hitler, the angry mustache model, and he's mad at the jews for existing. japan is finally conquering the east, and they're so excited, they rape nanking way too hard. they should probably just deny it. hitler's out of control, so the international community tackles him and tries to explain to him why killing all of the jews is a bad idea. but he kills himself because they could explain it to him. that's world war two! bonus round! pacific showdown united states vs. japan FIGHT!! united states drops two extinction balls on japan FINISH HIM! let's unite all the nations and have some world peace! seems legit. "hi, im gandhi, and if britain doesn't get the hell out of india, i'm going to starve myself in public." britain leaves "wow, that worked?" bonus! now there's pakistan. actually two pakistans, one of them can be bangladesh later. the jews and the arabs finally figured out which one of them should live in the holy land. "me!" they both said at the same time. let's divide up the lands so we're both happy. SIKE! they both get angrier! look out, china! there's a new china in china. what's on the menu? communism! no thanks, said the other china, escaping to an island. i wonder which one is the real china...? there's the korean war. korea versus korea! nobody wins, then its on pause forever. let's meet the sponsors. oh, it's the two global superpowers. they're having a friendly debate over which economic system is good and which one is an evil virus of satan. and they both have atom bombs. FIGHT!! wait, no, that would be the end of the world. let's just keep it cool and spy on each other instead. and make sure we have enough atom bombs. "i'll race you to space." united states plants a flag on the moon now let's make more countries fight themselves. europe is tired of pillaging other continents, and the continents they were pillaging are tired of being pillaged. so here's a new map with new countries. now you can't tell who they're being pillaged by. the united states finally decided whether racism is good or bad. they decided it's bad, and the world agrees. south africa might need another minute to think about it. let's check the world population! woah. okay. technology is better too, that might keep happening. the soviet union decides to relax a little, and accidentally falls apart. europe makes a union, so now they can all use the same money. except britain, because they don't feel like it. let's check the mail... surprise! it's on the computer! whoops, someone just attacked america. i bet they'll remember that. phone call! surprise! it's in your pocket! wanna learn everything? surprise! it's on the computer! now your phone's a computer, which is in your pocket! whoops, the economy just crashed. don't worry, the big banks won't fail, because they're not supposed to. surprise!... flying robots. with bombs. wanna print a brain? some people have no friends. some people have no food. the globe is warming, and the ocean is full of plastic! "let's save the planet!" said everybody, not knowing how. "let's invent a thing inventor," said the thing inventor inventor after being invented by a thing inventor. that's pretty cool. by the way, where the hell are we? thanks for watching history i hope i mentioned everything
Up 800% in the last 5 weeks trading only calendar spreads
Last month performance: https://imgur.com/a/Hd1mbYJ Graph starts at -$481, but my bottom was about a week before that at -$934 since I withdrew $1500 before taking the screenshot. The huge drop is from holding illiquid BBBY calendar spreads that displayed inaccurate values after market closing. Positions: https://imgur.com/a/MuqKctd Started trading options in January, literally a month before a giant market crash (lol). I made some money on airline puts but held through the recovery and I was down more than 90% after losing more than $10,000 on puts betting against JPow, was down to about $500. I'd had some good success with calendar spreads in the past so I ditched long options completely. So far I've finished plays on 10 companies and I've profited on all of them except one (fuck you WORK). Made my way up to about $3500, withdrew $1500 to pay some bills. I'm still down 70% from my starting deposit, so I've got aways to go before breaking even on my all-time graph. Currently sitting on a bunch of JPM put debit spreads that I picked up at Friday close and some PEP calendar spreads (tried to close these before closing but couldn't get them filled at my exit price, gonna just hold through earnings). https://imgur.com/a/pbbMeb7 This is kinda the crazy part: in the last 29 trading days, I've only had TWO red days (not counting the funky days holding illiquid BBBY spreads that don't accurately display my portfolio value). Calendar spreads are theta positive, so as long as the UL stays close to my strike, I almost always make money. Initially, I held most of my calendar spreads through earnings reports. Normally calendars lose value when IV decreases, but I've actually been able to grab huge profits from this strat because the short leg in the spread will always have a higher IV than the long leg right before the ER, so the IV crush will hit that short leg harder. In addition, I've mostly had success predicting the direction of the UL after the ER by setting my strike below or above the UL price before ER, and profiting when it moves towards that strike. The only time this hasn't worked was when WORK had a massive 20% drop post ER that destroyed my portfolio. Since then I've been a bit more careful about holding through ER and recently I've been closing most of my calendars the day before ER if decent profits are there. I've also started branching into more complex spreads to better play these ERs. So far I've started vertical spreads, double or triple calendars, and I'm planning on using ICs and butterflies as well. The kangaroo market has presented a perfect opportunity to play neutral strats on mid-cap companies that haven't been mooning like big tech. Would I have made more money if I had just gone long calls on tech a month ago? Perhaps, but personally I find my strat to be safer, especially since I expect the overall market to keep moving relatively flat for the next few months until the election gets closer. Next goal is to reach my AT break-even at around $6800!
Spread betting is a tax-efficient way of speculating on the price movement of thousands of global financial instruments, including indices, shares, currency pairs, commodities and treasuries. It allows traders and investors to take a position on whether they think a market will rise or fall without having to buy or sell the underlying asset. Spread betting is a leveraged product, which means you only need to deposit a small percentage of the full value of the spread bet in order to open a position (also called 'trading on margin'). While margined (or leveraged) trading allows you to magnify your returns, losses will also be magnified as they are based on the full value of the position. Spread betting is a derivative strategy, in which participants do not own the underlying asset they bet on, such as a stock or commodity. Rather, spread bettors simply speculate on whether the Trading Styles. Spread Betting the FX Currency Pairs. 08 June 2016. An important factor when spread betting the forex markets is the types of currency pair you choose to trade. For example, specific pairs may be significantly moved by commodity price changes (JPY and oil being a classic example). Spread betting allows you to trade on stocks, commodities, currencies and much more. Identify the markets with which you're familiar. Increase your chance of success by trading in markets where you have experience and knowledge. Compare spread betting companies. How spread betting works. In essence, spread betting is very simple. Will the
CFD trading vs spread betting is a fascinating discussion. They are leveraged devices, but the tax regulations they are subjected to, among others, are not the same. Spread Betting Strategies and Ideas. 4 Spread Betting Strategies - Trend Trading; a trend is basically something that is continuing in one direction. - Range Trading; popular when markets are a ... 76.5% of retail investors lose money when trading CFDs and spread betting with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford ... 78.6% of retail investors lose money when trading CFDs and spread betting with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford ... 76.5% of retail investors lose money when trading CFDs and spread betting with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford ...